Lloyds profits soar in Q3 as PPI pressure eases

Lloyds Banking Group, which includes Edinburgh-based Bank of Scotland, has announced third quarter pre-tax profits of £1.95bn – a year-on-year increase of 141 per cent.

The dramatic rise can be accounted for by the fact that last year’s result included a big provision to cover claims for mis-sold payment protection insurance (PPI).

Underlying profit for the period was £2.08bn, up 9 per cent on 2016.

The figures follow on from Lloyds’ half-year pre-tax profits of £2.5bn, which were the first results announced after the government finally sold its last remaining stake in the bank.

The UK taxpayer had owned more than 20 per cent of the group after its bailout at the height of the financial crisis in 2008.

The bank said it has not set further money aside to cover PPI claims, having made another £700m of provisions in July.

The Lloyds group has already paid out more than £18bn in PPI claims and received more following a Financial Conduct Authority (FCA) advertising campaign which saw Lloyds fielding 16,000 claims per week in the immediate period a the advert was broadcast.

The number has since dropped back to 11,000.

The FCA campaign highlighted a deadline for PPI claims of August 2019.

Should PPI rise above anticipated levels, it could pose a problem, “but we will be managing within the group’s resources and financial strength which we see today,” chief financial officer George Culmer said as the group’s latest results were pubished.

Group chief executive Antonio Horta-Osorio said: “These results highlight the strength of our customer focused, simple and low risk business model.”

The bank’s credit card arm performed well, with a reduction in “persistent” debt.

Commenting on interest rates, Mr Horta-Osorio said he anticipated that rate rises would be gradual and the bank was relaxed about an increase.